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People seeking help with payday loans up 82pc

Debt charity, StepChange, has said the that the number of people seeking help with payday loans has soared by 82pc in the last year, with a total of 66,557 people who took out a payday loan seeking help from the charity in 2013.

Worryingly, the average person also had a total of three loans, and an average debt totalling £1,647.

Chief executive at StepChange, Mike O’Connor, commented: “The widespread harm and misery caused by payday loans continues unabated.

"The industry has failed to address the problems causing untold misery and damage to financially vulnerable customers across the UK”.

Payday loans faced heavy scrutiny during the past twelve months, with regulators forcing new advertising standards on the industry, and the Church of England condemning the practice as unethical.

Payday loans become a major problem when repayment deadlines are missed by the borrower, at which point many lenders massively inflate the interest rate on the outstanding money. This has left many unable to repay the amount due, and in a lot of cases clients will then turn to other payday loans to cover their debt, which leads to a debt ‘spiral’.

The charity has suggested that real-time credit checks and limiting the amount of loan rollovers to one might help to ease the problem.

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